On the daily chart below, we can
see that the Russell 2000 is still stuck in the range between the 1723 support and the 50% Fibonacci
retracement level as resistance. Last week, the positive
headlines about a debt ceiling deal gave the Russell 2000 a boost going into
the weekend as the market expected a possible deal over the weekend.

Sure enough, Biden and McCarthy announced
a deal and the futures market this morning opened with a positive gap that was
soon after closed during the overnight trading. This may turn into a “sell the
fact” type of trade, so the technical levels will help with identifying that.

Russell 2000 Technical Analysis

On the 4
hour chart below, we can see that the big selloff from the 50% Fibonacci
resistance stalled near the 1740 swing low support and bounced as positive news
on the debt ceiling deal lifted up the risk sentiment. On one hand, if this is
a “sell the fact” trade, we should see the whole rally getting faded and the
Russell 2000 falling back into the 1723 support. On the other hand, if this
isn’t the case, then the price may start to rise again and reach the 50%
Fibonacci resistance at 1820.

On the 1 hour chart below, we can
see that the last Friday we got the breakout of the trendline and the
resistance zone at 1760 that eventually ended up in a strong rally for the
Russell 2000. Now, the buyers should be waiting at the 1775 resistance
turned support where they will also find confluence with the 38.2% Fibonacci
retracement level and the red 21 period moving
average. The sellers, on the other hand, will want to see the price to break
below that 1775 support zone to position for a fall into the 1760 level and,
upon an eventual breakout, target the 1723 low.

This article was written by ForexLive at www.forexlive.com.